Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Post market close on 28 May, the Shanghai Stock Exchange and China Securities Index Company announced the changes to the <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">SSE STAR 50 (STAR50 INDEX)</a>. The changes will be effective after the close of trading on 11 June.Just as we forecast, the inclusions are <a href="https://www.smartkarma.com/entities/ninebot-ltd" target="_blank" data-smartkarma-citation="entities:32180:1" rel="noopener">Ninebot Ltd (689009 CH)</a>, <a href="https://www.smartkarma.com/entities/sansure-biotech-inc" target="_blank" data-smartkarma-citation="entities:32182:1" rel="noopener">Sansure Biotech Inc (688289 CH)</a>, <a href="https://www.smartkarma.com/entities/cansino-biologics-inc-cc0c90b7-e854-4ba3-929b-914be1bd0d89" target="_blank" data-smartkarma-citation="entities:32181:1" rel="noopener">CanSino Biologics Inc (688185 CH)</a>, <a href="https://www.smartkarma.com/entities/verisilicon-microelectronics" target="_blank" data-smartkarma-citation="entities:32183:1" rel="noopener">VeriSilicon Microelectronics (688521 CH)</a> and <a href="https://www.smartkarma.com/entities/cathay-biotech-inc" target="_blank" data-smartkarma-citation="entities:32184:1" rel="noopener">Cathay Biotech Inc (688065 CH)</a>, while <a href="https://www.smartkarma.com/entities/suntar-environmental-techn-a" target="_blank" data-smartkarma-citation="entities:30342:1" rel="noopener">Suntar Environmental Techn-A (688101 CH)</a>, <a href="https://www.smartkarma.com/entities/shenzhen-qingyi-photomask-ltd" target="_blank" data-smartkarma-citation="entities:30351:1" rel="noopener">Shenzhen Qingyi Photomask Ltd (688138 CH)</a>, <a href="https://www.smartkarma.com/entities/traffic-control-technology-co" target="_blank" data-smartkarma-citation="entities:30309:1" rel="noopener">Traffic Control Technology Co (688015 CH)</a>, <a href="https://www.smartkarma.com/entities/hillstone-networks-co-ltd" target="_blank" data-smartkarma-citation="entities:30321:1" rel="noopener">Hillstone Networks Co Ltd (688030 CH)</a> and <a href="https://www.smartkarma.com/entities/ningbo-solartron-technolog-a" target="_blank" data-smartkarma-citation="entities:30380:1" rel="noopener">Ningbo Solartron Technolog-A (688299 CH)</a> have been deleted from the index.The changes imply that a 6 month minimum listing was used. Given the increase in number of stocks that are listed for more than 1 year, this could be last review where a 6 month minimum listing history is used.Inflows into the ETFs have continued and the impact on the inclusions and exclusions will be a few days of ADV with estimated one-way turnover at 5.3%.The inclusions have outperformed the deletions over the last couple of months and there has been an increase in excess volume over the last couple of weeks. We would use any sharp moves in the stock to pare down existing positions in the trade.

Post market close on 28 May, the Shanghai Stock Exchange and China Securities Index Company announced the changes to the SSE STAR 50 (STAR50 INDEX). The changes will be effective after the close of trading on 11 June.Just as we forecast, the inclusions are Ninebot Ltd (689009 CH), Sansure Biotech Inc (688289 CH), CanSino Biologics Inc (688185 CH), VeriSilicon Microelectronics (688521 CH) and Cathay Biotech Inc (688065 CH), while Suntar Environmental Techn-A (688101 CH), Shenzhen Qingyi Photomask Ltd (688138 CH), Traffic Control Technology Co (688015 CH), Hillstone Networks Co Ltd (688030 CH) and Ningbo Solartron Technolog-A (688299 CH) have been deleted from the index.The changes imply that a 6 month minimum listing was used. Given the increase in number of stocks that are listed for more than 1 year, this could be last review where a 6 month minimum listing history is used.Inflows into the ETFs have continued and the impact on the inclusions and exclusions will be a few days of ADV with estimated one-way turnover at 5.3%.The inclusions have outperformed the deletions over the last couple of months and there has been an increase in excess volume over the last couple of weeks. We would use any sharp moves in the stock to pare down existing positions in the trade.

STAR Board - STAR50 Index Rebalance: Inclusions Outperform Exclusions as Positioning Jumps

<div>The <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">SSE STAR 50 (STAR50 INDEX)</a> is a free float market cap weighted and is made up of the 50 largest stocks based on full market cap that are listed on the STAR Market.</div><div>The review period for the June rebalance ends on 30 April, the results of the rebalance will be announced towards the end of May and will be implemented at the close of trading on 11 June.</div><div>
A maximum of 5 changes are permitted in a single review.
<a href="https://www.smartkarma.com/entities/suntar-environmental-techn-a" target="_blank" data-smartkarma-citation="entities:30342:1" rel="noopener">Suntar Environmental Techn-A (688101 CH)</a>, <a href="https://www.smartkarma.com/entities/shenzhen-qingyi-photomask-ltd" target="_blank" data-smartkarma-citation="entities:30351:1" rel="noopener">Shenzhen Qingyi Photomask Ltd (688138 CH)</a>, <a href="https://www.smartkarma.com/entities/traffic-control-technology-co" target="_blank" data-smartkarma-citation="entities:30309:1" rel="noopener">Traffic Control Technology Co (688015 CH)</a>, <a href="https://www.smartkarma.com/entities/hillstone-networks-co-ltd" target="_blank" data-smartkarma-citation="entities:30321:1" rel="noopener">Hillstone Networks Co Ltd (688030 CH)</a> and <a href="https://www.smartkarma.com/entities/ningbo-solartron-technolog-a" target="_blank" data-smartkarma-citation="entities:30380:1" rel="noopener">Ningbo Solartron Technolog-A (688299 CH)</a> are high probability deletions from the index at the June review.
There is a high probability of <a href="https://www.smartkarma.com/entities/ninebot-ltd" target="_blank" data-smartkarma-citation="entities:32180:1" rel="noopener">Ninebot Ltd (689009 CH)</a>, <a href="https://www.smartkarma.com/entities/sansure-biotech-inc" target="_blank" data-smartkarma-citation="entities:32182:1" rel="noopener">Sansure Biotech Inc (688289 CH)</a>, <a href="https://www.smartkarma.com/entities/cansino-biologics-inc-cc0c90b7-e854-4ba3-929b-914be1bd0d89" target="_blank" data-smartkarma-citation="entities:32181:1" rel="noopener">CanSino Biologics Inc (688185 CH)</a>, <a href="https://www.smartkarma.com/entities/verisilicon-microelectronics" target="_blank" data-smartkarma-citation="entities:32183:1" rel="noopener">VeriSilicon Microelectronics (688521 CH)</a> and <a href="https://www.smartkarma.com/entities/cathay-biotech-inc" target="_blank" data-smartkarma-citation="entities:32184:1" rel="noopener">Cathay Biotech Inc (688065 CH)</a> being included in the index.
An alternate list of possible inclusions (with a lower probability) are <a href="https://www.smartkarma.com/entities/beijing-huafeng-test-con-a" target="_blank" data-smartkarma-citation="entities:30367:1" rel="noopener">Beijing Huafeng Test &amp; Con-A (688200 CH)</a>, <a href="https://www.smartkarma.com/entities/zhejiang-orient-gene-biotech-a" target="_blank" data-smartkarma-citation="entities:30379:1" rel="noopener">Zhejiang Orient Gene Biotech-A (688298 CH)</a>, <a href="https://www.smartkarma.com/entities/bio-thera-solutions-ltd" target="_blank" data-smartkarma-citation="entities:29127:1" rel="noopener">Bio-Thera Solutions Ltd (688177 CH)</a>, <a href="https://www.smartkarma.com/entities/hangzhou-raycloud-technolo-a" target="_blank" data-smartkarma-citation="entities:30391:1" rel="noopener">Hangzhou Raycloud Technolo-A (688365 CH)</a> and <a href="https://www.smartkarma.com/entities/hitgen-inc" target="_blank" data-smartkarma-citation="entities:30371:1" rel="noopener">HitGen Inc (688222 CH)</a>.
The expected inclusions and exclusions have been performing poorly over the last couple of months. The price falls have been accompanied by shrinking volume and the passive flow could have a larger impact on the stocks than what we had estimated earlier.
We recommend buying the expected inclusions and selling a highly correlated hedge basket to take advantage of the expected passive flows into the stocks.

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The SSE STAR 50 (STAR50 INDEX) is a free float market cap weighted and is made up of the 50 largest stocks based on full market cap that are listed on the STAR Market.The review period for the June rebalance ends on 30 April, the results of the rebalance will be announced towards the end of May and will be implemented at the close of trading on 11 June.
A maximum of 5 changes are permitted in a single review.
Suntar Environmental Techn-A (688101 CH), Shenzhen Qingyi Photomask Ltd (688138 CH), Traffic Control Technology Co (688015 CH), Hillstone Networks Co Ltd (688030 CH) and Ningbo Solartron Technolog-A (688299 CH) are high probability deletions from the index at the June review.
There is a high probability of Ninebot Ltd (689009 CH), Sansure Biotech Inc (688289 CH), CanSino Biologics Inc (688185 CH), VeriSilicon Microelectronics (688521 CH) and Cathay Biotech Inc (688065 CH) being included in the index.
An alternate list of possible inclusions (with a lower probability) are Beijing Huafeng Test &amp; Con-A (688200 CH), Zhejiang Orient Gene Biotech-A (688298 CH), Bio-Thera Solutions Ltd (688177 CH), Hangzhou Raycloud Technolo-A (688365 CH) and HitGen Inc (688222 CH).
The expected inclusions and exclusions have been performing poorly over the last couple of months. The price falls have been accompanied by shrinking volume and the passive flow could have a larger impact on the stocks than what we had estimated earlier.
We recommend buying the expected inclusions and selling a highly correlated hedge basket to take advantage of the expected passive flows into the stocks.



STAR Board - STAR50 Index Rebalance June Preview: Falling Volumes Increasing Impact

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

1. Industry viewpoints:<ul>
<li>In the aspect of Chinese patent medicines, the main varieties of proprietary Chinese medicine are expected to be the first to be included in VBP, and medicines of stable quality are a higher priority.</li>
<li>Chemiluminescence is in the stage of rapid growth and the trend of intensive procurement of IVD consumables could drive import substitution.</li>
<li>The wellness tourism market has a good development environment and a huge growth potential.</li>
</ul>2. Company news:News about the updated progress of COVID-19 vaccine and new drugs from <a href="https://www.smartkarma.com/entities/cansino-biologics-inc" target="_blank" data-smartkarma-citation="entities:27739:1" rel="noopener">CanSino Biologics Inc (6185 HK)</a>, <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a>, <a href="https://www.smartkarma.com/entities/antengene-corp-ltd" target="_blank" data-smartkarma-citation="entities:29705:1" rel="noopener">Antengene (6996 HK)</a>, and <a href="https://www.smartkarma.com/entities/akeso-biopharma-inc" target="_blank" data-smartkarma-citation="entities:28830:1" rel="noopener">Akeso Biopharma Inc (9926 HK)</a>.3. Market review:Last week, stock price for healthcare sector in A share decreased 8.2%, while CSI 300 decreased 7.65% over the same period of time. 4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints:
In the aspect of Chinese patent medicines, the main varieties of proprietary Chinese medicine are expected to be the first to be included in VBP, and medicines of stable quality are a higher priority.
Chemiluminescence is in the stage of rapid growth and the trend of intensive procurement of IVD consumables could drive import substitution.
The wellness tourism market has a good development environment and a huge growth potential.
2. Company news:News about the updated progress of COVID-19 vaccine and new drugs from CanSino Biologics Inc (6185 HK), Innovent Biologics Inc (1801 HK), Antengene (6996 HK), and Akeso Biopharma Inc (9926 HK).3. Market review:Last week, stock price for healthcare sector in A share decreased 8.2%, while CSI 300 decreased 7.65% over the same period of time. 4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Compared with developed countries, China's IVD industry started relatively late, and the overall technical level still lags far behind that of developed countries in Europe and America. However, in recent years, with the acceleration of the aging problem and the continuous growth of residents' income, the IVD has become one of the most active and fastest growing industries in China.

Compared with developed countries, China's IVD industry started relatively late, and the overall technical level still lags far behind that of developed countries in Europe and America. However, in recent years, with the acceleration of the aging problem and the continuous growth of residents' income, the IVD has become one of the most active and fastest growing industries in China. 

Industry Report - Insights on China IVD Industry

China

Shenzhen New Industries Biomedical Engineering Co., Ltd. operates as a biomedical company. The Company researches, develops, produces, and sells clinical laboratory instrument and vitro diagnostic reagent. Shenzhen New Industries Biomedical Engineering also offers related technical service.

Shenzhen New Industries Biomedical Engineering-A (300832 CH)

Shenzhen New Industries Biomedical Engineering-A

Price Gauge
52-week Range	0.00 - 0.00
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Shenzhen New Industries Biomedical Engineering-A (300832 CH)

STAR Board - STAR50 Index Rebalance: Inclusions Outperform Exclusions as Positioning Jumps

There are 5 changes to the STAR50 Index at the June review. The inclusions have outperformed the deletions and positioning has jumped sharply in...

Brian Freitas

STAR Board - STAR50 Index Rebalance June Preview: Falling Volumes Increasing Impact

We see 5 changes to the STAR50 Index at the June review. The deletions are high probability, but there is uncertainty on the inclusions due to a...

Brian Freitas

China Healthcare Weekly (Feb.26)

This article analyzed the VBP policy on Chinese patent medicines, the growth potential in the chemiluminescence and intensive procurement of IVD...

Xinyao (Criss) Wang

Industry Report - Insights on China IVD Industry

The article analyzed China IVD industry in terms of business mode, trend on efficiency and size of equipment and operation, opportunity in import...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)